Sabah mulls state tax on petroleum products
KOTA KINABALU: Sabah is mulling the idea of imposing a state tax on petroleum products in a similar move with Sarawak as both states seek more revenue in the absence of an increase in oil royalty from the federal government.
“We will look into that. It is definitely something that can help us increase our revenue,” Chief Minister Datuk Seri Mohd Shafie Apdal said.
Last Monday, Sarawak announced that it would impose a 5% sales tax on petroleum products starting next year.
But unlike Sarawak which made known the sales tax in its tabling of the state Budget, Sabah did not include it into its state Budget but did not discount the plan to emulate the Sarawak move.
“With more revenue, we can develop Sabah better and in tandem with the expectations of the people,” Mohd Shafie said after tabling his maiden state Budget 2019 on Friday.
He said Sabah, which was one of the biggest producers of oil and gas in the country, must look at various aspects to broaden its revenue base.
Sarawak is expecting to earn some RM3.9bil with the imposition of sales tax on oil, natural gas, liquefied natural gas, chemical-based fertiliser and gas to liquid products through the 5% tax next year.
The move in Sarawak comes as the promise to increase oil royalty from the current 5% to 20% for Sarawak and Sabah by the Pakatan Harapan-led federal government has yet to be realised. The two Borneo states are insisting on a 20% oil royalty but the federal government stated that it is still working out a formula, especially in view of concerns about the country’s financial situation.